Asian Stocks, Oil Fall on U.S. Jobless Claims; Bond Risk Rises

The yen weakened, snapping a four- day gain versus the dollar, on speculation Japan sold its currency for a second time in a month to protect exporters’ earnings. Asian stocks and oil prices fell on concern the global economic recovery is flagging.

The yen retreated 0.5 percent to 84.87 per dollar as of 4:06 p.m. in Tokyo from 84.38 in New York yesterday, after reaching 85.40 in trading today. Japan intervened on Sept. 15 and Finance Minister Yoshihiko Noda said the government will take “bold” action if necessary. The MSCI Asia Pacific Index slid 0.6 percent to 124.80 and the Stoxx Europe 600 Index fell 0.3 percent. Futures on the S&P 500 index rose 0.3 percent.

“There’s rumors of intervention,” said Adrian Foster, head of financial-markets research for Asia at Rabobank Groep NV in Hong Kong. “The low 80s appear to be their broad line in the sand. They’ve got an awful lot of bullets to fire.”

An unexpected jump in U.S. jobless claims yesterday and a report that economists said will show orders for durable goods dropped in August raised concern that growth in the world’s largest economy is flagging, prompting stock indexes in Japan and Australia to decline. Emerging-market shares rose after EPFR Global said funds targeting developing nations drew $3.38 billion in the five days ended Sept. 22, the most in seven weeks. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, raised $70 billion in the world’s largest share sale.

‘Aggressively Intervene’

Japan’s currency has gained 1.4 percent since the intervention last week pushed the yen down to a one-month low from the strongest level in 15 years. Vice Finance Minister Fumihiko Igarashi told reporters in Tokyo that he hadn’t heard of any intervention in the foreign-exchange market.

Japan “will again aggressively intervene in the foreign- exchange markets to prevent further yen strength,” Calvin Tse, a currency strategist at Morgan Stanley in New York, wrote in a research note yesterday. Morgan Stanley forecasts the yen will weaken to 93 per dollar by the end of the year, according to the note.

Japan’s Nikkei 225 Stock Average fell 1 percent to 9,471.67, lurching between a drop of 1.6 percent and a gain of 0.4 percent.

Canon Inc., the world’s biggest camera maker, dropped 1.7 percent and Fanuc Ltd., a maker of industrial robots that earns about 80 percent of revenue overseas, fell 1.1 percent. The yen plunged around 1:15 p.m. on speculation the government is intervening to weaken the currency, and then pared the advance.

U.S. Concerns

“Nobody disputes that Japan’s growth depends on exports, and the currency’s appreciation can wreck the country’s recovery,” said Hiroshi Morikawa, a strategist in Tokyo at MU Investments, which manages about $14 billion in assets. “Intervention moves the currency market strongly, so stock and bond markets react quickly to the possibility of intervention.”

Samsung Electronics Co., which gets 20 percent of its revenue in America, dropped 2.6 percent in Seoul. Hynix Semiconductor Inc., a computer-memory chipmaker that gets about a quarter of its sales from North America, lost 4.5 percent. HSBC Holdings Plc sank 0.5 percent in Hong Kong after a person briefed on the matter said Chief Executive Officer Michael Geoghegan will step down at the end of the year.

Fund Inflows

Asia’s developing-nation stocks rose, with the MSCI Emerging Market Asia Index increasing 0.2 percent to a two-year high. South Korea’s Kospi index climbed 0.8 percent, India’s Sensex index rose 0.3 percent and Indonesia’s Jakarta Composite Index jumped 1.6 percent to a record. Chinese markets are closed for a holiday today.

“Inflows into emerging markets have remained robust, which explains why the Asian markets in particular continue to hold up well,” said Michael Auyeung, who manages about $640 million as chief investment officer at Pacific Mutual Fund Bhd. outside Kuala Lumpur.

The Taiwan dollar climbed 0.2 percent to NT$31.54 per dollar and Malaysia’s ringgit gained 0.1 percent to 3.0975 on speculation global funds will pump more money into Asia’s developing nations to profit from the world’s fastest economic growth. Investors plowed about $45 billion into emerging-market equity funds in the year through Sept. 22, according to EPFR Global.

India’s rupee climbed 0.2 percent to 45.55 after the government lifted the cap on foreign investment in bonds for the first time in 18 months, doubling the limit on sovereign bonds was to $10 billion. It allowed overseas investors to buy $5 billion obligations sold by infrastructure companies, boosting permitted investment in corporate debentures to $20 billion.

Oil, Yen

Oil dropped 0.4 percent to $74.86 a barrel in New York after U.S. government data showed initial jobless claims increased by 12,000 to 465,000 in the week ended Sept. 18.

“There is negative sentiment sweeping the market,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “We’ve got enough oil. We need to see more confidence going through the economy.”

Treasury 10-year notes rose for a sixth day, the longest winning streak since yields fell to record lows in 2008. The 10- year yield dropped one basis point to 2.55 percent, according to BGCantor Market Data. Bookings for goods meant to last at least three years dropped 1 percent, the biggest drop in a year, according to the median forecast of economists surveyed by Bloomberg News before today’s release.

The cost of protecting corporate and sovereign bonds from default climbed, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan rose 3 basis points to 126 basis points, Credit Agricole CIB prices show. Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality.

To contact the reporters on this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry in Hong Kong at shendry@bloomberg.net

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